HesapHanem

DSCR Calculator

Find your debt service coverage ratio.

How it is calculated

The debt service coverage ratio is DSCR = NOI / annual debt service. NOI is the net operating income: rent or revenue minus operating expenses, before loan payments and income tax. Debt service is the total of principal and interest payments for the same period. Use the same period for both, normally a year. Debt service must be above zero. The ratio is shown with two decimals and a label: Strong at 1.25 or above, Adequate from 1.00 up to 1.25, and Weak below 1.00. A ratio below 1 means the income does not cover the payments. These cut-offs are common rules of thumb; each lender sets its own minimum.

Worked example

A rental property earns a yearly NOI of 150,000 and its loan payments total 110,000 a year. DSCR = 150,000 / 110,000 = 1.3636, which the tool shows as 1.36. That is above 1.25, so the status is Strong: income covers the debt payments about 1.36 times. If NOI fell to 105,000, the ratio would drop to 0.95 and the status to Weak.

Try this example →

Common mistakes

  • Using gross rent or revenue instead of NOI; operating expenses must be subtracted first.
  • Mixing a monthly NOI with an annual debt payment, or the other way round.
  • Counting only the interest and leaving out the principal in debt service.
  • Including the loan payment in operating expenses, which counts the debt twice.
  • Treating 1.25 as a universal requirement; lenders and property types differ.

Sources

About this calculator

This calculator finds the Debt Service Coverage Ratio, DSCR = Net Operating Income ÷ Total Debt Service, which tells you how many times over a property or business's income covers its loan payments (principal plus interest).

Lenders use it as a core underwriting metric before approving a commercial real estate or business loan — most require a DSCR of at least 1.20 to 1.25. Real estate investors run the same number themselves before making an offer, to check whether a rental property's cash flow can realistically support the mortgage.

Was this helpful?

You can pick up to 3 reactions.

Comments (1)

  • Editorial team

    Use net operating income before any loan payments, and put income and debt service over the same period, both yearly or both monthly. The tool labels 1.25 and above as strong and 1.00 and above as adequate. Lenders set their own minimums, so treat these bands as a guide. As a stress test, at 1.25 your income can fall by 20 percent before the ratio reaches 1.00. What minimum has your lender asked for?

Popular calculators

Loan Calculator

Monthly payment, total interest and full amortization schedule.

Percentage Calculator

Percent change, percent of, and ratio calculations.

Discount Calculator

Calculate final price, savings, and discount amount.

BMI Calculator

Body mass index from height and weight (metric or imperial).

Age Calculator

Compute your exact age in years, months and days from a birth date.

Compound Interest Calculator

Calculate the final amount and interest earned with compounding.

All Calculators